MonthSeptember 2008

Silt in the machine: the real metaphor for the Wall Street ‘bailout’

Over the weekend I watched the car-crash interview of Sarah Palin being interviewed by Katie Couric, particularly on the “bailout” of Wall Street. (The video is later. Read me first. No skipping.)

First, I wonder, why is it that people are calling this a bailout? I’d feel confident that’s not what Hank Paulson called it. Bailouts are what sinking ships need. This isn’t so much a sinking ship as machinery gumming up.

That’s what so far nobody seems to have found – a good metaphor for the reason why this money was needed. (Since they’ve now gone ahead and agreed the form, though the Today program had an American pundit saying that popular opinion – expressed through letters and calls to senators and congressfolk – is running at 40-1, 60-1 against it.

OK, so I thought about it for five minutes to try to find the metaphor for what’s going on. Here’s what you should say if you’re a presidential or vice-presidential candidate. Though obviously if you do, you’ll be nicking it from me, with all that implies.

Think of Wall Street and those companies are running a giant machine. It needs oil; but they put oil in, turn the handle, and out comes money which they can lend you so you can buy a house. There are lots of places you can put the oil in.

One day some folk came up with a formula for the oil which had a Special Ingredient. It generated more money for the same amount of oil. Fantastic! Everyone started taking advantage to lend more money out.

Then they discovered – around April 2007 – that there was a bit of a drawback to the oil. It turns to silt. Which meant that you turn the handle, and far less comes out. Pretty soon the whole machine is silted up. What Hank Paulson is proposing is to drain the machine of silt, and spend $700bn on real, proper, known-to-work oil so that the machine can get back to normal. It won’t be able to generate money at the speed that it did in those glory years – but that was false, because that was running on the silted oil. The $700bn is required to drain the sump.

But why, you say, should we reward these Wall Street people for failure? Well, hang on here – what we’re fixing is the machine. We’re not saying that you reward the operators who happily poured the new formula oil in without first checking what its long-term effects would be. They’ve got some serious explaining to do.

OK? Got that? That’s how you would explain it, I hope, to an American prime-time TV audience. And that’s by me, just thinking while driving to the station – took about two minutes. Yes, you can argue some of the particulars, but silt in the machine is the clearest way to understand that you’re not “bailing out” the bosses, you’re bailing out (if you must) the machine that ultimately funds the businesses you work for and buy from and lend from.

Now let’s see how one of the vice-presidential candidates managed:

(Two points: first, when you’ve said enough, stop talking. Second, before the interview: this is doing the classic American TV trope – “let’s have a discussion about something that you’re going to see instead of just showing you the whole thing, thus cutting up information into tiny twitching pieces, because you’re stupid, aren’t you, American TV viewer?” – as described by Kieren.)

China delayed poisoned milk investigation until after Olympics, says Economist

Fascinating story in The Economist:

The government blames middlemen who collect milk from dairy farmers. They allegedly added water to increase its volume and, to disguise this, mixed in melamine, a chemical used to make plastics, which can deceive inspectors about the milk’s protein content. Melamine gained notoriety last year when several pets in America died after eating food contaminated with it by Chinese-made additives.

The central government has boasted it was quick to react to the latest problem. But the chronology revealed so far suggests otherwise. It has fuelled speculation of a delay to make sure the Olympic games in August were not marred by a food scare.

(Emphasis added.)

The government of Gansu province in China’s west says it told the Ministry of Health on July 16th about an unusual upsurge of kidney stones among infants who had all drunk the same brand of milk. It was not until September 1st that the ministry says its experts tentatively concluded that the powder had caused the sickness. Still, nothing appeared to happen.

Prodding from the government of New Zealand may have been what eventually goaded the Chinese authorities into action. On September 8th it told them what it had learnt from Fonterra, a New Zealand dairy company that owns 43% of Sanlu [until recently one of China’s biggest producers of milk powder]. Fonterra says it was told by Sanlu of a problem with the powder on August 2nd, six days before the games.

(Emphasis added.)

Now, of course one should usually not ascribe to malevolence what can be ascribed to incompetence, but with the tainted milk thing really kicking off (European ban, children still dying) I’m not persuaded that someone who could have taken action didn’t see it, but suppressed it.

After all, what’s the deaths of a few children compared to favourable worldwide TV coverage?

You said it was missing an ‘a’ or a ‘a’, Mr Coren?

Giles Coren managed to make himself a figure of fun with his incredibly ranty email to the subs at The Times.

And elsewhere, Bruno Ganz’s incredible scene from Downfall – the film about Hitler’s last days – has been covered endlessly in the corridors of YouTube, where it’s been used (with subtitles) about Xbox modding, the European referendum in Ireland, Vista, and on and on.. (it’s a fully-fledged meme).

And now, we present the chief sub’s office in The Times. Dim the lights…

Why not explain the $700B bailout with a comic – you know, like Google?

A very quick thought on the financial perhaps-it’ll-turn-into-a-full-blown crisis now engulfing the US stock markets.

Why, rather than writing up a bill said to be “the size of two bookends” to justifying the $700 billion bailout (really, a purchase of “toxic” assets whose real value is uncertain – so how are they sure they’re worth $700bn? – meaning that Wall Street gets real money to play with, while the US government owns lots of dilapidated homes in Florida) – why, instead of that, didn’t they just follow the example of one of the biggest companies around?

After all, when Google wanted to launch a new browser, it didn’t do it with big long thick press releases. (Or if it did, I certainly whizzed past it.)

Instead, it hired a cartoonist to explain it. Which he did, very thoroughly, making the problems of runaway processes, browser hangs, Javascript compilation and regression testing comprehensible to anyone who has got past moving their lips while they’re reading. (Unless they’re giving speeches, of course, President Bush.)

I do think there’s just a chance that a cartoon might have made it all moer comprehensible. Not least to the poor American electorate who are going to have to explain to their children why their banks are all owned by China. And their car makers. And supermarkets. Though their houses – ah, their houses are their own. In fact, everyone’s.

I wonder what that comic would read like, though? Anyone care to hack the Google Chrome one? It’s Creative Commons, after all.

Imagine the regulation stink if British banks hadn’t been allowed to deal in toxic loans

So, the Bush neo-conservative government is buying all those toxic loans with more than $100bn of the American peoples’ money. Near enough. Actually, the numbers don’t matter. It’s the principle of the thing: the banks screw it up, and the government bails them out completely, giving them a get-out-of-jail free card, swapping their rubbish assets – which in many cases they can’t actually put a concrete value on – for real money.

Amazing. The nationalisation of banking risk, no matter how you try to spin it.

What I’d really like to see is some analysis of quite how much economic growth was enabled by all those toxic loans. I mean, that’s the thing, isn’t it? These were about making money, and spinning up some very dubious debt into what were effectively bonds. Everyone’s paying for it now, in terms of the housing market falls (and consequent retail falloff, and thus-consequent economic falloff).

The real question is, what would economic growth have looked like if we hadn’t had those loans? A lot slower? A little slower? Someone needs to do the reckoning on this, I think.

As for the people wondering how Britain got into this position: I think it’s pretty easy to imagine. US investment banks start generating these amazing financial instruments which seem to generate money out of the air. In Britain, investment banks see them and are envious as hell: they want to have some.

Imagine now that the Financial Services Authority had told those banks that no, they couldn’t have or buy or deal in those instruments. (We’re talking about CDOs and CDSs here.)

And imagine the howl and stink that the banks would have put up about being denied that. You’re regulating us too much! they would have cried. You’re stifling our business! Look, in the US they can offer lower interest rates because these things, which we’re assured are copper-bottomed, generate the sort of returns that mean we can offer cheaper mortgages. Are you sure, Mr (or Ms) MP, that you want us to tell your constituents – via the newspapers – that we can’t offer them cheaper mortgages because you’re regulating us too much. Imagine it.

Faced with that, and the prospect of cheaper loans, which of course will lead to more house purchases, which will lead to a growing economy, which will lead to more tax receipts and less unemployment… would you, as a government minister listening to these bankers who have been lobbying the FSA, turn them down?

You can see how it all unfurled. Everyone honestly believed it would be all right. Or at least, that by the time the music stopped they’d have made their pile and got off.

We call it “the accidents of history”: from archive to stock crash

Nice to see these sequentially in Martin Stabe’s RSS feed:

from the Official Google Blog, September 8:

“Today, we’re launching an initiative to make more old newspapers accessible and searchable online by partnering with newspaper publishers to digitize millions of pages of news archives.”

Next (more recent) item in the feed: United shares plunge on old news story:

“A six-year-old Chicago Tribune story on United’s 2002 bankruptcy filing, spotted on a Google search on Monday morning by an investment newsletter, triggered a massive sell-off of the carrier’s shares until trading was halted. … Google said a link to the story appeared on Sunday on a [South Florida Sun-Sentinel] web page listing the business section’s most viewed stories, but without any dateline referring to 2002. “

Discuss in the light of the prediction that you’ll have no subeditors in five years (sooner obviously if you’re at Express Newspapers)…

Analysing what gets read is where it’s going, but is getting paid going the same way?

Chris Green posted a while ago about how he’d spent ages sweating over the precise statistics of who clicked through to read what, and what that told him about whether he was getting value for money from his freelances.

Scary, huh?

Every few months I perform what I call a contributor/traffic analysis. This involves generating a report from the main IT PRO site stats tool that shows the page impressions (PIs) and unique user visits (UUs) generated by author, rather than by article type or section.

I then merge this data with the main contributor expenditure spreadsheet, where we record and track all our freelance spending.

The end result is that we have the traffic generated by an author alongside how much weíve spent with them over the given period. You divide the amount spent by either the PIs or the UUs and you end up with a cost per PI and a cost per UU, based on a specific author.

Itís not a perfect system, as the PIs and UUs also include legacy content written by that author that was accessed during the given period, not just the new stuff youíve commissioned and allocated budget for. However, it still provides a valuable metric on the effectiveness of that authorís work to bring in traffic to the site, as well as the cost of acquiring that traffic.

We can do this a bit with the Guardian’s “Most viewed” widget, which is available for any section. (Have a look at Technology’s Most Viewed, which is for the past 24 hours or seven days.)

Quite amazingly, the most-read for the past 24 hours are all from the past week. (Except the “50 best YouTube videos” one. That sort of thing never dies.) And actually, right now it’s unusual, because nothing in the most-viewed for the past seven days or 24 hours is older than a few weeks.

That’s not always the case; quite often stories from a year, two years, three years ago will pop up abruptly, and often – because of the way that “most viewed” tabs work – stick there.

This is the bit that gives me pause about Chris’s musings on paying people. Are we going to get into some weird pay-per-click model, where freelances get paid a certain basic amount, and then more if the number of pageviews goes over a certain amount? I can see that it might be worth hiring a botnet for a week or two to see if you could get around that. Or seeing Digg etc with your stories. Hell, being a freelance would be an arms race in all sorts of ways; writing the story would become the least of the challenges. Making sure it got read enough would become a prime aim.

Of course there’s all sorts of things that a site editor can do – by watching your traffic, tweaking headlines, choosing clever pictures. But something about what Chris is describing makes me …uneasy.

Perhaps though it’s just the adjustment to the world where we really can measure these things (and so ought to, I guess). They’re telling commissioning editors uncomfortable things about what subjects really get read. (I find it interesting to track how many paper-to-web clickthroughs we get from the links we use in Technology. It’s a lot.)

What’s the feeling though? Is it only sensible to do this or is it going over the top?

Bonus link: Countervalue reckons that copy editing has about five years left before it’s made redundant by computers.

But how, ask at least a dozen copy editors, can I really expect to replace headline writing and rewriting of crap copy?

I donít know where you guys have been for the last few years but you obviously have no idea what Google Labs has been up to or how major publishers have been playing about with text mining engines (TMEs).

I spent most of yesterday with one of the Telegraph Media Groupís major software suppliers. If youíd seen my Twitter updates you will have known that I was not expecting anything beyond yet another demonstration of an integrated web and print CMS. But what my colleague from IT and I were shown will, if development proceeds as expected, replace the sub editor, the researcher and, quite possibly, a whole load of news editors within five years.

Feeling reassured now? No? Do explain…

Books I read on holiday: lies, truth, and stuff in between

I’ve been meaning to write this for a couple of weeks – since I got back from holiday, in fact. In France, it rained at night and the sun shone in the day. This seemed a good arrangement. And with no TV and no internet, there was time to read.

I read: Belle du Jour, by .. um.. Belle du Jour; Bringing Nothing to the Party, by Paul Carr; The Other Hand, by Chris Cleave; and The Last Juror, by John Grisham (it came free with a magazine somewhere).

First BDJ. My wife (she’s a novelist) read it first because she wanted to know if it was real. On finishing, she went “hmmm…”. I began reading it. And gave up one-third of the way in.

Why? Because I couldn’t believe it. I couldn’t believe that there was a single person writing it. Or if there were, then I felt that person was just lying to me all the way through. (And I didn’t think much of the writing either, tell the truth.)

An instance: at one point, she goes to a big awards dinner with her friend B (or G or X – it’s like the secret service). Yup, her friend B – who she says is “a bouncer at a gay pub”. A what? I didn’t know there was such a job. And if there is, is it really so well-paid that you’ll be getting along to awards dinners – unless it’s Gay Pub Bouncer Of The Year? I’m sorry, but I couldn’t believe at least one-half of that scenario. And when you stop believing that sort of thing, what are you left with? Are these diaries of life, or what? And how strange that none of the clients she dealt with was ever unattractive, rude, smelly. Again, you’re sure there’s no fiction involved here?

I spoke later – on getting back – to some people who I thought might know. (I know, I know, it’s been debated endlessly.) I’m assured by people like Zoe Margolis that BDJ really does exist, and is one person. Well, OK, I’ll have to accept that. But it turns out too that many of the details are obscured; she isn’t Jewish, for example, and there’s much more that she purposely obscured to protect her identity.

Well, OK, fine; conceal yourself. But then don’t be surprised if people giev your book up less than a third of the way through, because it’s not the truth, and it doesn’t work very well as fiction either.

On to Paul Carr’s Bringing Nothing To The Party – subtitled “confessions of a new media whore”. What’s it with my holiday reading and whores?

Anyhow, this is a completely different thing: Carr, who started the Friday Thing, is compellingly honest about his desire to make it rich like (it seemed) all the other internet people in London – Moo, milliondollarhomepage,, that sort of thing. And so he tried to get an internet startup, er, started.

Where it’s so compelling is in his description of how hard you have to work the spinning wheels to make the Emperor’s new clothes that so many startups wear. They’re not just surviving on fresh air; they’re wearing it too, and trying to sell it to anyone who’ll listen – angel investors, venture capitalists, the press. Seeing the crunch come like a slow-motion car crash is compelling reading. Recommended.

And then we come to The Other Hand, a work of fiction by Chris Cleave. How to describe this? It’s a fantastic novel. Cleave’s first book was Incendiary, about people bombing a train in London. It was published on July 7 2005. Ouch.

That thought gives you some insight into the sort of writer Cleave is: he’s tuned in to the things that are going on underneath the patina of society.

Anyhow, The Other Hand.. is about a British woman who has a finger missing from her left hand, an African beach where she lost it (and not in the sense of “I’m sure I left it here..”), the woman who were there, the British woman’s husband.. and also immigration and asylum policy in the UK, the Home Office spin cycle, women’s magazines, national newspaper opinion columns, and of course four-year-old boys who are certain they are Batman. Clear enough?

The quote to mull over: “As I stood there in my green bikini with my hands over my tits I realise that I had freeloaded myself into annihilation.”

It’s a great book, a fabulous read that despite – or perhaps because – it’s fiction is far more true to life than BDJ. It’s got the graininess of life. Highly recommended.

And finally, John Grisham’s The Last Juror, which turns out to be about a local reporter in a Mississippi paper who buys it out – in the 1970s – when its owner dies. It’s engrossing, quite long (it covers about a decade) and full of realistic touches. I’d expected that it would end with a huge car chase, explosion and last-minute rush into a courtroom. Not at all; the ending is almost an anticlimax. It reads more like Grisham’s paean to the lost times of small newspapers and small towns: when there weren’t Wal-Marts in every town, when the small stores were the lifeblood of the place, when you knew pretty much everyone you needed to.

When journalists bite spindoctors

It happens very rarely that American journalists actually carry out a penetrating interview – don’t forget Kieren’s post about the awfulness of US TV news, where they don’t actually tell you news – but the presidential campaign seems to have put at least one on her mettle. Fantastic interview here, or just watch it: the fireworks start about five minutes in, as Ms Brown interviews some guy called Tucker, who is desperately spinning for the McCain campaign on Sarah Palin over the question of what on earth she actually did that was worth doing in Alaska:

Found at Ewan Spence’s blog, where he has a great comparison of the UK’s most vicious – yet fair – interviewers, vs the US.

Just for a reminder of how bad it can be. Kieren did have a clip that he said was almost parodic – but it’s been taken down. Hmm.